Business and the Accountability Imperative by Rohan Preece

As the 2018 edition of the Status of Corporate Responsibility in India repeatedly illustrates, there are many examples today of businesses impacting people’s well-being, whether in the context of employment; in terms of human rights and environmental effects; through goods and services we consume; through Corporate Social Responsibility (CSR) defined in the Companies Act, 2013; and in other ways. Their multifaceted roles, and their far-reaching impacts, mean that businesses sometimes enable, but also sometimes serve to frustrate, community and individual access to a wide range of public goods and constitutional entitlements. This makes businesses highly significant, as shapers of both community and individual well-being and of core social and environmental outcomes.

In early modernity, the perceived requirement for a decisive contributor to and guarantor of cohesion and prosperity underpinned the justification for the State. Since then, the State-Citizen relationship has been widely framed in terms of a social contract, exemplified in India in the Constitution. The Constitution of India presupposes that Government is capable of acting constructively to ensure citizens’ achievement of certain Fundamental Rights, and, in this way, of promoting well-being. At the same time, citizens, through systems of representative democracy have at least some (albeit inadequate) opportunity to hold Government to account, and to do so based on the extent to which they are able to serve these ends.

However, whilst there are also frameworks, both historic and emergent, which serve to describe relationships of accountability between businesses and their publics, such responsibilities have tended to be framed differently, resting in her identity as a customer, a consumer, or a stakeholder. These frameworks of accountability have often excluded certain ‘stakeholder’ groups (such as marginalized communities impacted by business) even whilst, and sometimes because, they have privileged others (such as shareholders). Where they have been inclusive, they have often been voluntary, and lacking in teeth. Though there has been considerable progress in recent years, through legislation such as the Modern Slavery Act of the UK, and the French Corporate Duty of Vigilance law, coverage remains patchy at global, regional and many national levels, not least in India. There are thus inadequate and insufficient institutional mechanisms through which citizens can effectively hold businesses accountable, even whilst their work and wider impacts contribute to or impinge on Constitutional Rights. At the same time, there is also evidence from communities that businesses’ involvement in delivery of key public goods is contributing to the creation of a culture of dependence on Corporations’ CSR for rights realisation. One reason this is problematic is because business is required neither to be formally accountable nor democratically responsible for their actual performance in this domain.

These developments raise questions of the extent to which constitutional entitlements and broader well-being of citizens now hinge on non-State actors. Questions, for example, of the degree that they depend, in certain areas in which business CSR programmes operate, and in other contexts where businesses are active, on strategic prerogatives of companies rather than the elected State. The recently launched Ayushman Bharat Yojana, which relies critically on the private sector, is a prime example of reliance on the private sector for public goods delivery. Insofar as non-State actors are depended on, questions of remedy in case of non-delivery of entitlements become pertinent: but to these there are not always satisfactory answers. These broader transitions also raise questions as to whether the authority of the State is undermined by incursion of businesses into spaces originally designated for it, such as the supply of core public goods like education and healthcare. They can result in diminished expectations of the State, and heightened (but not proportionately, or adequately) expectations of non-State actors.

Whilst such changes may not in and of themselves be problematic, a key concern is the extent to which citizens are equipped to navigate and respond effectively to an evolved scenario. For in a democracy, any institutionalised responsibility to contribute to the public good must be accompanied by an adequate measure of accountability for that contribution. What this means is that for every opportunity businesses take up to ‘do good’, or provide a public service, there must be a consonant handing over of power to the people that the good is intended for (in the same way that power should also be handed over to those at risk of harm by business, as envisaged in the third pillar of the UN Guiding Principles on Business and Human Rights).This is the power that monitors, that asks questions, that is listened to, that receives answers, that reminds the service provider that in seeking to do good, it acts not for its own sake, but for others.

This is a power that should be enabled by business, but guaranteed by the firm hand of Government. And in a country such as India, it is essential, especially when businesses, in seizing the opportunity to serve, make many citizens at least partially dependent on them for the realization of the Fundamental Rights the Constitution promises.